Run it profitably
By Alan Bohling, president, Seattle Boat Co.
There was a time in our business here at Seattle Boat Co. (Ranked 16 in 2006) when we did not report profit and loss within individual departments. We looked simply at the whole company without regard to the performance of each department. But we received a shock when we began allocating a proportionate percentage of expenses departmentally. Our service department (technician labor, fiberglass and detail labor only) was running nearly $500,000 in the red each year. We were a $7 million sales and service dealer with a seemingly healthy 2-to-3 week service backlog but were consistently hovering around break even. So solving the service loss became our top priority.
A few other key factors contributed to our change in perspective. Our commodity was the number of hours a technician can collect and at what rate. A discounted rate given to the sales department, or for warranty work, didn’t make sense when retail customers were lined up, willing to pay normal rates. The technician’s billable hours were the key to supporting several other staff, not just themselves, plus the department’s overhead and proportionate corporate expenses. We looked at the department in reverse by determining our total expenses, and then by adding a reasonable net profit to determine our service department revenue goal.
Although it didn’t happen overnight, we slowly changed our technician pay plans to incorporate a “flat-rate bonus.” Flat rates are determined by normal allowable time per service job, as reported in flat-rate manual resources, such as Spader, Mercruiser, Volvo, etc. We made every effort to support our technicians so that every minute of their time was productive. We measured the technician’s punch card versus billed hours for efficiency every day and posted them next to the time clock. We provided tool bonus incentives for reaching certain levels of efficiency at month’s end. The results of these efforts began paying off.
We continued to evolve and improve the process. We reviewed other dealers’ methods of operation. At each salary review period, we added wage benefits to the flat-rate bonus rather than base wages. Each off-season, we meet as a team to brainstorm definable goals and strategies to reach them. Key procedures today include:
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